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Innovation, exports, productivity and investment climate; a study based on Indian manufacturing firm-level data

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  • M.-A. Véganzonès-Varoudakis
  • P. Plane

Abstract

In this paper, we use univariate instrumental estimations to study the interactions between firm-level innovation, exports and productivity in the Indian manufacturing sector. To differentiate incentives to innovate from the ability to innovate, we distinguish the inputs of innovation (R&D and training) from the outputs. Our findings highlight a virtuous circle between the three components of innovation, as well as between firms’ R&D, innovation and exports. The productivity of Indian manufacturing firms is benefiting from this dynamics, as exports and innovation improve firms’ TFP. With respect to the investment climate, our results suggest that differences in the environment of Indian companies contribute to their performance gaps. These results are all the more important in the context of the Make in India campaign and the weaknesses of India’s business environment.

Suggested Citation

  • M.-A. Véganzonès-Varoudakis & P. Plane, 2019. "Innovation, exports, productivity and investment climate; a study based on Indian manufacturing firm-level data," Applied Economics, Taylor & Francis Journals, vol. 51(41), pages 4455-4476, September.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:41:p:4455-4476
    DOI: 10.1080/00036846.2019.1591606
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    Cited by:

    1. Teimuraz Gogokhia & George Berulava, 2021. "Business environment reforms, innovation and firm productivity in transition economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 221-245, June.
    2. Dong, Guowei & Kokko, Ari & Zhou, Haoyong, 2022. "Innovation and export performance of emerging market enterprises: The roles of state and foreign ownership in China," International Business Review, Elsevier, vol. 31(6).
    3. Wu, Lichao & Wei, Yingqi & Wang, Chengang, 2021. "Disentangling the effects of business groups in the innovation-export relationship," Research Policy, Elsevier, vol. 50(1).
    4. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.
    5. Amy Kahn & Moses Sithole & Yasser Buchana, 2022. "An analysis of the impact of technological innovation on productivity in South African manufacturing firms using direct measures of innovation," South African Journal of Economics, Economic Society of South Africa, vol. 90(1), pages 37-56, March.
    6. Wu, Lichao & Wei, Yingqi & Wang, Chengang & McDonald, Frank & Han, Xia, 2022. "The importance of institutional and financial resources for export performance associated with technological innovation," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    7. Berulava, George & Gogokhia, Teimuraz, 2021. "The Impact of Business Environment Reforms on Firms’ Performance in Transition Economies," MPRA Paper 106327, University Library of Munich, Germany.

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